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November 20, 2001

After Council
advocacy, Congress extends Internet tax moratorium for two
years

After
The Business Council mounted strong opposition to proposals
to tax Internet-based commerce, Congress voted to reject Internet
taxes and instead extended for two years the current moratorium
on Internet taxation.

The
moratorium was extended Nov. 15 on a voice vote.

Late
that afternoon, The Business Council, working with PinPoint
Communications of Albany County, launched an urgent "electronic
advocacy" campaign to urge New York's Senators Charles Schumer
and Hillary Rodham Clinton to support the moratorium extension.

The
Council asked members of its Electronic Commerce Committee
to visit a site on the Internet from which they could automatically
launch faxes in support of the tax moratorium to Senators
Schumer and Clinton.

In
only a few hours of activity, 53 faxes to the senators' offices
were generated, said Diana Ehrlich, The Council's legislative
analyst specializing in electronic commerce.

The
day before, Business Council President Daniel B. Walsh wrote
to Senators Schumer and Clinton urging them to extend the
moratorium and reject "tax simplification" proposals that
would have enabled taxes on Internet commerce.

New
York, Walsh wrote, "was one of the first states to exempt
Internet access from sales taxes and it has taken a solid
stance on not taking actions that will hurt the development
of the Internet and e-commerce."

Ending
the tax moratorium "would impose significant costs to both
consumers and businesses," and uncertainty in rules after
the moratorium lapsed would "impede business' ability to plan,"
Walsh wrote.

One
"tax simplification" proposal being considered would have
taxed only remote sales - which would have undermined Internet-based
commerce, he added.

"If
states are given the right to burden out-of-state sellers
with tax collection obligations but can apply different rates
and definitions to sales that take place in person, Internet
and other remote sales will be disadvantaged," he said.

"Rather
than force an ineffective compromise, the Senate should pass
the extension that gives the states the time they need to
achieve meaningful simplification and is supported by the
states themselves."